Wednesday, March 14, 2012

Retail Sales and the Health of the US Consumer

When I last reviewed the US consumers position (early last week), I noted the following:

The good news in the above charts lies in the durable goods numbers,
which show a consumer who is confident enough int the future to take on a
big purchase. However, the stalling of PCEs and near-stalling or
retail sales for the four months is concerning and clearly needs to be
watched over the next few months.

Americans heartened by an improving
labor market boosted spending at stores and malls by the most in
five months, adding to signs that the world’s largest economy is
gaining strength.

The 1.1 percent advance followed a 0.6 percent increase in
January that was larger than previously estimated, according to
Commerce Department data issued today in Washington. Sales rose
in 11 of 13 categories, including auto dealers and clothing
stores, showing gains in demand were broad based.
.....
“There are a number of factors that are helping release
this pent-up demand,” Don Johnson, vice president of GM’s U.S.
sales, said on a March 1 conference call with analysts. “They
include stronger employment, good credit availability, and both
of those are leading to improving consumer sentiment.”

Automobile stockpiles jumped by the most in more than a
year in January, leading a 0.7 percent increase in business
inventories, the Commerce Department said in a separate report
today.
Retail sales excluding autos increased 0.9 percent in
February, exceeding the median forecast of economists surveyed
that called for a 0.7 percent gain.

As I noted before, the continued move higher in durable goods purchases is encouraging, as it indicates a certain level of confidence among consumers.

The above chart from the report shows that gains were broad-based/

I've highlighted two points from the report.

1.) Auto sales are still strong. That is very encouraging.
2.) Building materials and supplies increased strongly as well.

Overall, this report indicates the consumer is still buying things -- which is a very welcome bit of news.